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Peabody, ArcelorMittal make hostile Macarthur bid

01 august 2011, 14:51
US company Peabody Energy and Europe's ArcelorMittal on Monday launched a hostile bid for Macarthur Coal after the Australian miner refused to back a US$5.3 billion takeover offer, AFP reports.

America's largest coal company Peabody and the world's biggest steel concern ArcelorMittal told Macarthur shareholders they were being offered a 41 percent premium to the miner's recent average stock value.

"Peabody and ArcelorMittal believe our bid is compelling," Peabody Energy chairman and chief executive Gregory H Boyce said in a statement.

"We have decided to take this offer directly to Macarthur shareholders to provide them with significant value."

Peabody and ArcelorMittal had initially offered A$15.50 per share but during due diligence offered to boost this to A$16, subject to Macarthur agreeing not to talk to other potential suitors.

But Queensland-based Macarthur, the world's largest miner of pulverised coking coal, used as a low-cost input in steel making, earlier Monday rejected the bid because it wanted to keep talks with others open.

In going direct to shareholders, Peabody and ArcelorMittal said they would offer Aus$15.50 a share plus a dividend of 16 cents a share, which they said represented a significant premium to where the stock was before they bid.

A bidder's statement would be lodged shortly and sent to shareholders about two weeks later, Boyce added.

In rejecting the earlier offer, Macarthur chairman Keith DeLacy called it "opportunistic".

"The offer appears to be an opportunistic attempt to acquire Macarthur at a time of global economic volatility and regulatory uncertainty in Australia, and fails to reflect Macarthur's industry-leading position," he said.

The company added: "While there can be no assurance that a superior proposal will emerge, Macarthur's directors consider it is clearly in shareholders' interests to do all that they can to facilitate this."

Macarthur operates two sites with mines in production and intends to double capacity by 2014 with two other sites.

ArcelorMittal is already the second-biggest shareholder in Macarthur with 16 percent of the shares, behind Citic, a Chinese investment fund, which owns 24.3 percent. South Korean steel-maker Posco owns seven percent.

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